The Supreme Court allowed Harold Wildgust and Carrickowen Limited’s appeal after the High Court dismissed their negligence action against Norwich Union Life Insurance Society over a life policy that lapsed in 1992. The Supreme Court held Norwich Union liable, but left the terms of its order for discussion with counsel and did not address contributory negligence or the separate costs cross-appeal.
The judgment, delivered by Mr Justice Geoghegan on 22 March 2006, concerned a policy assigned as security for loans taken by Carrickowen. The monthly premium due on 23 March 1992 was not paid by direct debit. Norwich Union notified the lender, Hill Samuel Bank, but not the Wildgusts or their insurance broker.
The lender’s manager, Declan O’Hanlon, contacted Mr Wildgust, who said he had sent a bank draft to cover the premium. The draft had been treated as an excess payment and refunded to Carrickowen. Mr Wildgust learned this only after the policy lapsed in May 1992.
On 22 April, O’Hanlon called Norwich Union to check the policy’s status. A file note accepted by the High Court recorded that the insurer confirmed it had received the cheque and that “everything was correct and in order”. The policy was not in order. Mr Wildgust was not told about the enquiry and did not personally rely on the insurer’s answer.
The High Court dismissed the claim on the ground that Mr Wildgust had neither known of nor relied on the misstatement. On appeal, Geoghegan J held that personal reliance by the claimant was not essential in every negligent-misstatement case. He reasoned that Norwich Union should have foreseen that an incorrect answer could harm Mr Wildgust, who had a beneficial interest in the policy, and that the circumstances created a special relationship giving rise to a duty of care.
The judge said Hill Samuel and O’Hanlon were not shown to be Mr Wildgust’s agents, but agency was not necessary to establish liability. He considered the risk of liability to a large, unknown group absent in this case and concluded Norwich Union was liable to the appellants.
The judgment said it expressed no view on contributory negligence issues raised in the amended pleadings, including alleged direct or vicarious responsibility connected with the Bank of Ireland. The bank’s claim had settled during the High Court hearing. Norwich Union’s cross-appeal concerned costs; the judgment deferred that matter to consideration of the costs of the appeal as a whole.